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Specialst Audio Channel At Breaking Point, Dealers Need Help

The specials audio and custom install channel is facing major problems with several distributors now concerned at “debt levels” that they claim have risen during the past six months with several retailers now defaulting on their credit terms.

Some distributors are already starting to limit supply or demand upfront payments for stock while also expanding into mass retailers who are starting to sell premium branded networked audio products.

Three major distributors have told ChannelNews that they are “constantly” being approached to buy struggling retailers but when they investigate the offered businesses, have poor cash flow, ageing stock and declining sales.

Many are also struggling to attract customers into their stores because they can no longer afford to market their business.

Audio Active who have been the subject of speculation recently over claims that they were set to buy the Lifestyle Store have denied categorically that they are set to “invest or buy” the business.

A Company executive told ChannelNews that the Sydney based Lifestyle Store is a key client of Audio Active and are a store who sells “a lot” of their products.

Several traditional specialist Channel distributors who witnessed growth last year said that this was because they had moved to establishing relationships with mass retailers such as JB Hi Fi and were expanding into the specialist AV and custom channel.

Melbourne based Qualifi now has their Denon and Marantz products ranged at JB Hi Fi while Harvey Norman has grown sales of the Denon HEOS 24-bit sound bar range.

Paul Riachi the joint CEO of Indi Imports is set to make a major announcement that will see the Company expand sales of their premium Loewe TV range via a new major retailer. He has already doubled sales during the past 12 months.

Currently he has two containers on the water with all the stock “pre-sold and paid for” he said.

During the past 12 months Indi has expanded sales of their Q Acoustic product range with several special dealers now doing business with David Jones who have successfully expanded sales of their consumer electronics offering.

Melbourne based Synergy is benefitting from an expansion of the products they sell with their Rega turntables proving popular.

According to several distributors it is the commercial and Pro AV market that is delivering growth as the consumer market struggles.

Yamaha Display At West Coast Hi Fi seen as doing it right.

Last Week the CEO of Sydney based distributor Convoy International Geoff Mathews passed away after 45 years selling premium Hi Fi products into the Australia.

Days before his passing Mathews told ChannelNews that he was concerned where the AV and sound market was going.

He said “The market is tough, and we are initiating change in our business. We need to understand the millennial better, but my biggest fear is the channel we have to deal with is struggling. Many experienced people who have been in this business for decades are today looking for a retirement nest egg from the sale of a business, they want out before the market gets any worse , but there are no buyers out there” he said.

He added “During the past two years I have had several approaches to buy my business and what I believe you will see is the merging of distributors during the next 24 months. We need an industry association that helps these dealers, while this has been tried in the past and failed it needs to be looked at again”.

“There are some who have got the model right but there are more dealers struggling than ever before”. he said/